Has Tapestry, Inc. Tapped into the Global Market with its Iconic Brands?
Has Tapestry, Inc. Tapped into the Global Market with its Iconic Brands?
Tapestry, Inc. is the parent company of Coach, Kate Spade, and Stuart Weitzman TAPESTRY.COM The parent company sells handbags and accessories to customers globally. One brand they offer is called Coach, Inc. and was founded in 1941 in New York City and has branded itself as a luxury brand for women and men globally. Coach is a leading design house of modern luxury accessories, with a long-standing reputation built on quality craftsmanship COACH.COM Coach as evolved and offers affordable luxury handbags and accessories globally.
Business growth had stagnated for Coach in recent years and life cycles of Coach’s products seemed to be in decline. Resources needed to be revamped and realigned. Coach was aware of the competition in the industry in which they were in and acknowledged that they needed to strategically gain more market share and a new generation demanded new and trendy designs. In order to capture a new market and remain competitive they would find an alliance with Kate Spade to remain competitive and sustainable with a new business model to address the competition globally. Therefore, strategic thinking is necessary in order to arrive with the correct strategy when competition is gaining market share and becoming a threat to another company’s business.
Coach was at a pivotal point in the company’s history in 2017. The fashion accessory and apparel luxury handbag industry styles were changing and the market was demanding new style and fashion. Coach was competing among other well-known brands in the industry such as Prada, Gucci, and Louis Vuitton. Coach even changed its name to Tapestry, Inc. and re-branded the company in order to sustain its business and therefore acquired Kate Spade another designer handbag and apparel designer company. This strategy would be to align with other well-known quality luxury brands in order to create greater value and attract more market share in the competitive industry of fashion handbags and apparel items. The question now will be if Tapestry along with Coach, Kate Spade, and Stuart Weitzman can continue to expand into the global markets with their famous brands.
Tapestry needs to focus on their current markets, but find other markets to capture market share and grow their business in the global community. They currently have their core customers that are faithful to their brands. Focusing on the Millennial market and the Generation X market may globally boost revenue and brand value. Through the recent acquisition of Kate Spade they may be able to gain more customers that admire this brand on a global level.
Differentiation in the market can be valuable for Tapestry’s consumers. Coach’s leadership was aware that the industry was changing and competition was increasing, therefore they pivoted and acquired Kate Spade. In order for Coach to sustain a competitive advantage they found an opportunity to innovate and remain relevant in the market. The goal of Coach appears to ultimately evolve into a multi-brand luxury company that serves the global market.
Competitive Advantages with Strategic Alliances
Strategic alliances may give Tapestry a competitive advantage in the luxury handbag and apparel industry with the addition of the Coach, Kate Spade, and Stuart Weitzman brands. At the firm level it would allow Coach to differentiate itself with the addition of known brands that also create luxury and affordable handbags and accessories focused on capturing Millennials. This may maximize value for the company at the firm level. It also allows Coach to realign its resources in what it does best and that is creating affordable quality luxury handbags and accessories for customers globally. The addition of the Kate Spade brand may create more value for Coach as well by reaching more of the global market. At the customer level it would also create an opportunity for customers to have more options and continue to purchase from all of Tapestry’s well-known brands. Therefore, perhaps the Millennial generation may find value in purchasing Coach’s handbags and Stuart Weitzman’s shoes. Furthermore, Generation X and the Baby Boomer generation may find value and interest in Kate Spade handbags and accessories. The main effort may be spent in advertising and increasing distribution options for both brands to reach consumers more efficiently and provide availability for consumers to purchase the handbags globally through different channels.
Finally, other companies within the industry such as Michael Kors, The Sak, and Burberry may need to compete even harder to capture more of the market that has been taken by the Tapestry brands with the recent alliance and acquisition of Kate Spade and re-branding of the Coach name with the formation of the parent company called Tapestry, which also includes Stuart Weitzman.
The company appears to be focusing on the long-term goal of reaching the international market with an international presence by expanding Coach, Kate Spade, Stuart Weitzman brands even further. The expansion internationally may allow for further market share to be obtained and potential revenue growth. This may also create more competition for the luxury affordable handbag industry in the Asian and European market that is currently in place. Kate Spade’s unaided awareness in China is 1 percent, compared to Coach’s 23 percent and there is opportunity for growth in the Japanese market as well. In Japan, it’s 11 percent for Kate Spade versus 50 percent for Coach. There is also an opportunity for Tapestry to grow with Kate Spade and Coach brands in the Asian market, while still maintaining multiple footprints in Europe. CNBC.COM (https://www.cnbc.com/2017/05/08/coach-ceo-says-he-doesnt-want-consumers-to-know-it-owns-kate-spade.html)
Currently, Kate Spade and Stuart Weitzman appear to be struggling under Tapestry. Kate Spade sales were down 9 percent and Coach’s sales increased by 3 percent. Tapestry shares plummeted to about 13 percent back in May 2018, according to Bloomberg (Fashionambitions.com) Coach appears to be hanging on and fighting for sales in the global market. It will be important for Tapestry to continue to tap into the European and Asian markets using full force marketing and continue strategic opportunities to push their accessories through unique distribution channels. The distribution channels may include social media use to reach a mass market in Europe, Asia, and beyond.
Tapestry together with all of its brands offer many capabilities from the firm level. They complement each other. They still remain separate, but for Tapestry it creates a change in their business model. They have a unique opportunity to create such a dynamic capability of offering iconic brand name handbags and accessories to many different markets around the globe. They just need to tap even further into the current market and continue to differentiate the brands they have. They need to build on their reputation of offering quality and affordable luxury handbags and accessories to their customers. They must leverage this as a dynamic capability they offer in order to penetrate the global market even further. The verdict may still be out on the global market and growth Tapestry may encounter, but ultimately it will be up to the consumers to decide the final verdict and the direction Tapestry will take in the future.
Finally, Tapestry has many resources that are of rare designer handbags that have created value for their customers over decades. They have created more market power to compete in the market place. Coach in a sense was trying to mitigate risk and reduce their own weakness in a sense by purchasing Kate Spade and re-branding with the hopes of outperforming their competition. Coach had the resources to acquire Kate Spade and they found a great opportunity. There next opportunity may be in markets that already exist and where they have a footprint and that being in Europe and Asia. With any opportunity there is always risk, but in the end there may be great value for all with this luxury fashion powerhouse bringing talent together and creating valued products that consumers keep wanting more of globally.
- Kate Spade photo credit: https://www.cosmopolitan.com/style-beauty/fashion/a21085296/kate-spade-fug-girls/